Ask the Analyst: Lisa Pierce on SIP TrunkingAsk the Analyst: Lisa Pierce on SIP Trunking

Pricing elements and rates vary by type of provider--legacy providers vs. newer competitors.

We're trying out a new format, asking analysts to respond to specific technology or other sorts of questions. We begin with Lisa Pierce of Strategic Networks Group, responding to a question submitted by an audience member during a recent VoiceCon webinar in which she took part:Question: What are some of the pricing elements of SIP Trunk services?

Answer: Many business customers are interested in using SIP Trunks, but want to understand a number of issues, including pricing elements. Pricing elements and rates vary by type of provider--legacy providers vs. newer competitors.

For Legacy Providers:

Business customers that are looking at a carrier which has a large base of legacy analog lines and PSTN services can expect to see the following types of monthly recurring charges (MRCs):

* T1/T3 access charge. Except for the M24/48 multiplexing charge, this will be the same price you pay now

* Port charge for SIP Trunk. Many carriers bundle the port and access charge together.

* Simultaneous session fee. At peak period, this is the number of active SIP sessions that will be running over the access line. Depending on the provider, on-net calls may or may not be built into this fee.

* Offnet calls. Domestic and International LD calls to or from the PSTN typically are considered offnet calls--their per-minute price is similar to legacy prices. Some providers, like AT&T, offer an optional higher MRC that includes both US local and offnet domestic LD calls.

* Local calls. Typically legacy PSTN providers will charge the same way for local calls that they always have-depending on the locale, based on metered use or per minute. Depending on the customer, legacy providers will support local incoming and outgoing calls over SIP Trunks in areas outside of their historic local serving areas.

* Blocks of DIDs. If your SIP trunk provider is a legacy provider, it's often the same price (pre-SIP).

Newer Providers:

These companies typically charge for T1/T3 access, SIP Trunk MRC, number of peak simultaneous sessions, and offnet LD calls. Many newer providers bundle in local calls into their predefined local calling areas as part of the SIP Trunk MRC. These calling areas may be similar to, or of different geographic scope than an incumbent provider's local calling area.

Some Caveats:

1. Definition of "On-Net": Most domestic providers restrict this definition to calls between SIP Trunks. In contrast, calls between a SIP Trunk and PRI or in-band T1 are considered offnet, and billed at the higher rate. Of major legacy providers, only one domestic provider that I am aware of extends this definition to include one end of the call as any form of dedicated access (in-band T1, PRI). That provider is Global Crossing. 2. Minimum number of simultaneous sessions/T1. Many providers' standard minimum bandwidth to support SIP applications is 384 kbps; Verizon Business is a case in point. Such reserved bandwidth typically is not available for other services, like MPLS or Dedicated Internet Access. However, the majority of providers allow non-reserved, idle bandwidth to be used by these other services. Some providers require lower reserved bandwidth for SIP (as low as one session). One such example is Qwest.

Economics:

Some businesses, like Riverside Bank, find it possible to cost-justify moving to SIP Trunks at a high-volume call location without implementing either IP Telephony or Unified Communications (see http://www.nojitter.com/blog/archives/2009/03/keeping_tdm_pbx.html). But today, most businesses find that the majority of benefits are derived from (1) re-architecting the WAN to optimize traffic flows across multiple company sites and (2) implementing Unified Communications (whose economic benefits are usually heavily weighted towards productivity improvements).Pricing elements and rates vary by type of provider--legacy providers vs. newer competitors.